By Aspiration Sharma
Rising incomes and wealth inequality have led to climate change, depletion of biodiversity, increased inequality on the basis of race, color, and unemployment – all of which have taken a serious turn after the epidemic. But they’re getting more and more focused – thanks to the activism that surrounds these issues in the broader shadow of the ESG.
While there is no debate or second thought about the relevance of the ESG and its urgency, this aggression has become a movement to improve environmental, social and administrative performance. Investors, fund managers, financial institutions have started looking for ESG performance updates before investing. And that’s right. Each of these problems is characterized somewhere in the corporate value chain. Therefore, the increased focus on ESG performance is often seen as a conscious business behavior towards environmental and social factors and ensures active adoption.
Now, activism is usually reprimanded, as it comes with a negative connotation of associated rigidity and aggression. So it is very important to understand its social definition and its purpose away from superstition. However, we also need to make sure that this rightful awareness of ESG performance appraisal does not confuse or ultimately obscure its true potential and purpose. It is equally important to check the quality of ESG advocacy from time to time.
The Sustainable Goals adopted by the United Nations were an urgent call for a better, more inclusive and managed future. The problems we face today are too serious to be left to theory and sporadic decision making. The ESG Activism allows for integrated and continuous adoption of frameworks that enable mitigation and facilitate sustainable and meaningful change.
And that’s exactly what the ESG advocates expect. Their demands are simple – corporates need to be vigilant, responsible and contribute to the interests of others. Their agenda focuses on ensuring that businesses do not compromise on their activities and profits at the expense of compromised or negative environmental and / or social impacts. In fact, it is interesting to note that the demand for ESG has increased The criterion is that a call is limited not only to employees who lie outside of direct business participation or tend to pressure the business to align their activities or funds, depending only on the issues relevant to their concerns. The spectrum is also witnessing the activism of the shareholders. These are investors-shareholders, whose interest in the traditional business set-up was limited to profit and return, who are now actively advocating for ESG standards.
This is the first time such a big change has taken place – in the spring of 2021. Investor activist Engine No. 1 was able to create such pressure on ExxonMobil’s board to use clean energy that the corporate giant, a public company, made significant changes to its board and a large turnover. With the ESG activation of Engine No. 1, especially in the fight against climate change, ExxonMobil has found a place on the board. A record 12 environmental proposals were submitted to U.S. companies in 2021 and passed with the support of a majority of shareholders. Following ESG standards and an established link between financial health, organizational health and risk-mitigation, investor employees are finding acceptance and more space on corporate boards.
Now there are ‘non-investor activists’ in addition to investor activists. They differ from the former in their approach; However, the results are unanimous. Shareholder ESG activism takes into account the interests of investors when attempting to change business behavior in line with ESG rules. While these active and conscious attitudes fuel the sustainability process quite well, the reverse side of activism cannot be ignored. The line of useful activation and power trip can easily be blurred because they are not individually defined. Inflexible and forceful activism can even spiral into politicization or polarized corporate functions for the ESG. Such trends can push companies to make quick weightless decisions to avoid employee stress. They can put the company in a more divisive or divisive situation, which is otherwise and usually requires a concise strategy.
Therefore, even with a noble and just purpose, the ESG should not be taken lightly. As a catalyst for growth and development, companies need to find a balanced middle ground where ESG activism is properly recognized and the active forces are integrated without being spiraled uncontrollably.
(The author is an ESG expert and author of “Greater Common Good.” He works and writes on sustainability practices, technology, policy, finance, and social impact. Opinions expressed do not reflect the official position or policy of Personal and Financial Express Online.)